Edited version of private advice

Authorisation Number: 1051775852493

Date of advice: 3 November 2020

Ruling

Subject: Vehicle, accommodation, meals and incidental expenses

Question

Are you able to claim a tax deduction for vehicle, accommodation, food and incidental expenses whilst working away from your usual place of residence?

Answer

No.

This ruling applies for the following period:

Year ended 30 June 20XX

The scheme commences on:

1 July 20XX

Relevant facts and circumstances

Your primary place of residence is in Town A.

You currently work in Town B.

Your work location is approximately XXXkm away from your primary place of residence.

Your manager gives you X shifts in X days to minimise travel time for you and time required to spend away from home.

While working your shifts you stay in staff accommodation.

You pay for all travel costs such as vehicle, accommodation, food and incidentals.

You do not receive a travel allowance or receive any reimbursements from your employer.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 8-1

Reasons for decision

Expenses incurred in travelling are deductible expenses under section 8-1 of the Income Tax Assessment Act 1997 where they are incurred in gaining or producing assessable income except where the outgoings are of a capital, private or domestic nature, or relate to the earning of exempt income or a provision of the taxation legislation excludes it.

Certain expenditure is incurred in order to be in a position to be able to derive assessable income, for example unless one arrives at work it is not possible to derive income. This does not mean that the expenditure is incurred in the course of gaining or producing assessable income. Rather, the expenses are incurred to enable the taxpayer to commence income earning activities (Lunney & Hayley v. Federal Commissioner of Taxation (1958) 100 CLR 478; (1958) 11 ATD 404; (1958) 7 AITR 166).

Generally accommodation, meal and travel expenses incurred by a person who lives away from home in order to carry out his or her work duties, at the place of work, will not be deductible. Expenses of this nature are private, or incurred before or after the activity of earning assessable income.

The issue of expenses incurred in relation to accommodation near the work place while maintaining a family residence in another location has been considered by the courts.

In Federal Commissioner of Taxation v. Toms 89 ATC 4373; (1989) 20 ATR 466 (Toms Case) the Federal Court disallowed a forest worker's deduction for the cost of maintaining a caravan and other living expenses. The taxpayer incurred the expenses in providing temporary accommodation at the base camp because the taxpayer had chosen to reside at a place far from the worksite. These expenses were dictated not by work but by private considerations.

However, accommodation, meal and travel expenses will be allowable where they are incurred by a taxpayer while they are travelling in the course of undertaking their work duties, for example, where the taxpayer's work is itinerant such as in the case of a travelling salesperson or an interstate truck driver.

For a taxpayer's work to be considered itinerant, they must be required to travel between multiple work sites before returning home. It is not sufficient that the taxpayer has different work sites if they are not normally required to travel between the work sites before returning home.

Your circumstances are comparable to that in Toms Case in that accommodation and other expenses are being incurred because your normal residence is located a substantial distance from where you work.

The accommodation, meal and travel expenses are not incurred in the course of earning assessable income, rather they incurred in order to put you in a position to earn assessable income. These expenses are considered to retain their inherently private nature.

Therefore, your accommodation, meal and travel expenses are not deductible.